TITLE

STOCK-OPTION-BASED EXECUTIVE COMPENSATION PLANS AND LODGING FIRMS' RISK-TAKING

AUTHOR(S)
Ming-Che Chien; Min-Ming Wen; Yang, Charles C.
PUB. DATE
September 2013
SOURCE
Tourismos;2013, Vol. 8 Issue 3, p1
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
This study investigates the impact of stock-option-based (SOB) executive compensation by lodging industry firms on risk-taking, and whether or not perceptions of the risk firms face affects the design of CEOs' compensation contracts. The data analyzed include market-based risk measures and executive compensation for 98 firms over the period from 1992 to 2005 (totaling 734 firm-CEO observations). The study examines research questions by using three-stage least squares in estimating a two-equation simultaneous equation system, in which both firm's risks and compensation structures are endogenous. Risk is measured by total risk and idiosyncratic risk. Results show that contracts with large versus small bonus-option components induce risk-taking and in addition, perceptions of firms' risk do substantially impact the design of compensation contracts.
ACCESSION #
95008463

 

Related Articles

  • DO SEASONED CEOS PREFER FEWER BOARD MEETINGS? EVIDENCE FROM PUBLICLY TRADED FIRMS. Aidong Hu; Richman, Vincent; Santos, Michael // Review of Business Research;2007, Vol. 7 Issue 2, p29 

    We examine how firm characteristics and CEO compensation contract affect the frequency of annual board meetings. As predicted by corporate governance under managerial entrenchment hypothesis, the propensity to hold board meetings is significantly and positively associated with the size of the...

  • The CEO's Agent. Warner, Judy // NACD Directorship;Oct/Nov2007, Vol. 33 Issue 5, p10 

    The article focuses on the role of corporate counsels who advise their CEO clients on their employment contracts, specifically pertaining to compensation. These counsels are hired by CEO, not only to negotiate the terms in the contracts, but also to smoothen relationship with the corporate...

  • CEO compensation: Turning conventional wisdom on its head (almost). Chowdhury, Shamsud D.; Wang, Eric // Ivey Business Journal;Nov/Dec2004, Vol. 69 Issue 2, p1 

    Contrary to conventional wisdom, a CEO's fixed salary, or non-contingent pay, has not increased in recent years. In fact, a CEO's fixed salary, as a proportion of his or her total compensation, has been decreasing. Moreover, the greater the independence of a compensation committee, the more a...

  • The Wall Street example: Bringing excessive executive compensation into line. Hodgson, Paul // Ivey Business Journal;May/Jun2004, Vol. 68 Issue 5, p1 

    The market is up, and the CEO is rewarded with a huge compensation package. The market is down, and the CEO is rewarded with a huge compensation package. There's plenty wrong with this picture, not the least of which is the lack of any link between pay and performance, and the absence of any...

  • CEO Compensation for Top Performance.  // International Professional Performance Magazine;2007, Vol. 15 Issue 4, p20 

    The article focuses on the issue of paying compensation to those chief executive officers (CEOs) who fail to perform their duties in the U.S. It infers that CEO should not be well compensated if they would not take the risk and they should go away without any added compensation when they fail to...

  • New Bearings for Compensation Committees. Poerio, Mark // Venulex Legal Summaries;2002 Q4, p1 

    The article provides information on the new policies applicable to executive compensation and employee benefits in the U.S. William McDonough, president of the New York Federal Reserve said that chief executives and board members should decide to cut excessive expenses on the part of top...

  • Is Any CEO Worth $1 Million a Year?  // Directors & Boards;Winter82, Vol. 6 Issue 3, p26 

    The article presents highlights of a panel discussion related to compensation of chief executive officers (CEO) and the role of Compensation Committees in the U.S. Panelists were CEOs of corporations, most of whom were chairmen or members of the Compensation Committee of companies. Among the...

  • THE FINANCIAL PAGE: PERK HOGS. Surowieck, James // New Yorker;6/14/2004, Vol. 80 Issue 16, p68 

    Comments on the controversy over the pay and fringe benefits of chief executive officers in the U.S. Factors influencing the wage hike among executives; Implications of the heightened pay for stockholders; Lack of link between executive pay and corporate performance.

  • How Much Pay... for how much performance? Delves, Donald P. // Across the Board;Jul/Aug2004, Vol. 41 Issue 4, p14 

    Discusses the issue of CEO compensation in the event of greater scrutiny of executive pay by boards of directors and the shift to greater creativity and accountability in paying for performance by management. Tools in compensation practice; Rationale for determining the amount a CEO should be...

Share

Other Topics